Duchess of York's divorce settlement was worth £3 million

The Duchess of York and her daughters have received around £3 million from the
Royal family as part of her divorce settlement, it can be revealed.

The Duchess of York, Sarah Ferguson with her daughters Beatrice (left) and Eugenie Photo: REUTERS

By Andrew Alderson and Robert Mendick

9:00PM BST 29 May 2010

The revelations contrast with the Duchess's repeated claims that she has been financially cut adrift by the Queen and the Duke of York.

The Duchess, who last weekend was the victim of a tabloid newspaper sting in which she offered to sell access to her former husband for £500,000, was secretly filmed twice claiming her divorce settlement was "zero".

She then upped the figure to £15,000.

Senior members of the Royal family have kept silent over the claims but courtiers are incensed by the Duchess's suggestions that she was abandoned financially.

Royal officials say the Duke of York, who is the UK's unpaid Special Representative for International Trade and Development, knew nothing about his former wife's offer.

Senior sources have given The Sunday Telegraph precise details of the divorce settlement in order to disprove the Duchess's "outrageous" claims. Her package agreed in 1996, when the couple divorced, included:

£500,000 provided by the Queen for her to buy a new house for her and her children.

£1.4 million provided by the Queen to set up a trust fund for Princesses Beatrice and Eugenie.

£350,000 in cash provided by the Queen which had no restrictions on its use.

An agreement that the Duke of York would pay his daughters' private school and university fees.

A modest monthly allowance which it is believed was then based on the Duke of York's salary as a Royal Navy officer.

Royal sources estimate that the cost of 14 years of school fees and the modest monthly allowance total well over £500,000 meaning the Queen's former daughter-in-law and her children have received around £3 million from the Royal family in the past 14 years.

Furthermore, the Royal family did not insist on an all-binding confidentiality clause as part of the divorce settlement which has enabled the Duchess to cash in on her royal connections, including earning £2.2 million from writing her autobiography.

The late Diana, Princess of Wales received a £17 million from her divorce settlement but only in return for a watertight confidentiality agreement.

"The Duchess's claims are quite extraordinary," said one senior courtier. "She was treated extremely generously and she has now behaved appallingly."

Sources close to the Duchess admit that she is, for the second time in her life, saddled with substantial debts, believed to total around £1 million.

However, in the mid 1990s she had a £4.2 million overdraft but she went on a four-year earning spree in America to pay off the debts.

The Duchess, who is 50, could face scrutiny from Her Majesty's Revenue and Customs over the "cash for access" claims.

She was filmed by an undercover News of the World reporter taking a $40,000 (£27,000) cash down-payment.

As well as seeking the £500,000 "access" fee, the Duchess also wanted one per cent of any future deals.

Furthermore, the newspaper reported its "whistle-blower" claimed the Duchess had sought "access" payments from others before the sting.

A senior accountant, who used to work as a tax inspector, said that the newspaper claims will have been recorded by HMRC in the Duchess's personal tax file.

The Duchess has, however, now returned the $40,000 to the paper and has denied receiving any other money in return for introductions to the Duke.

Friends of the Duchess continue to insist that her financial plight is the result of her poor divorce settlement.

One source disclosed that about ten years ago she took legal advice from Anthony Julius, of Mischon de Reya, one of the country's best known divorce lawyers, with a view to trying to go back to the Royal family and renegotiate the settlement.

They say that Mr Julius was outraged by how small the settlement was, but the Duchess in the end did not pursue a new deal.

The Duchess has already publicly apologised for her "serious error of judgement" in falling for the sting.

She also filmed a ten-minute interview on Friday for The Oprah Winfrey Show. This will be screened on Tuesday and will show her again apologising for her behaviour.

With her daughters now grown up, the Duchess is considering moving to the US and basing herself in either New York or Los Angeles.

"She wouldn't be running away but that is where she has to make money," said one source. The Duchess insists that she will, once again turn to media, publishing and licensing deals to pay off her debts.

Friends say her desperate financial plight led her to fall for the sting. The friends say that only three years ago the Duchess's finances were solid.

However, she decided to concentrate her American operations in Hartmoor, a company that dealt with her media, publishing and licensing work.

The anticipated earnings never materialised and last year Hartmoor folded with debts of £650,000.

The Duchess has since been sued in Britain for alleged debt to a firm of solicitors of nearly £200,000, although it is understood some of the money has now been paid.